By Jung Sung-ki
A Chinese state-owned company recently agreed to invest $2 billion in North Korea’s Rason special economic zone, a local newspaper said Friday.
According to the JoongAng Ilbo, Shangdi Guanqun Investment Co., Ltd. signed a 10-point memorandum of understanding (MOU) with Pyongyang’s Investment and Development Group Dec. 20 in Beijing.
Under the agreement, Rason, a northeastern city of North Korea bordering both China and Russia, is to be developed into the “biggest industrial zone in Northeast Asia” in about 10 years, it said.
The project calls for coal-fired power plants, roads, piers and oil refineries in North Hamgyeong Province, according to the paper, which obtained documents on the MOU.
The deal might have been discussed by North Korean leader Kim Jong-il and Chinese President Hu Jintao last year when Kim visited China on two occasions, it said.
In the face of worsening economic problems following international sanctions imposed after its second nuclear test in 2009, North Korea has desperately been seeking ways of luring foreign investment.
To that end, Pyongyang changed a law regarding the Rason economic zone in January last year in an effort to attract more foreign investment, including from South Korea.
Under the revision, the reclusive state is to lower tax rates and simplify administrative procedures for foreign investors who want to establish branch and agent offices in Rason.
The revision took effect Jan. 22 when Pyongyang upgraded the status of Rason to a special city.
China is investing in Rason as an export base to serve markets in Japan and the Pacific.
Rason is a merger of two towns, Rajin and Sonbong, and was designated the first free trade zone in the North in 1991.